Obesity is a public health problem worldwide, which results from an imbalance between energy intake and expenditure. Adipose tissues play an important role in regulation of energy balance. Two functionally different types of fat tissue are present in mammals: white adipose tissue is the primary site of triglyceride storage and release of fatty acids, and brown adipose tissue is specialized for energy expenditure via thermogenesis. The long-term goal is to determine factors that underlie the divergent differentiation fates and functions of these two adipose cell types. These factors may contribute to regulation of whole-body energy balance and development of obesity. Our preliminary studies have suggested an important role for bone morphogenetic protein (BMP)-7 in regulation of brown adipogenesis and mitochondrial biogenesis. Based on these findings and previous knowledge of the effects of BMPs on white adipocyte differentiation, we hypothesize that different members of the BMP family play crucial roles in determining the differential developmental fate of brown vs. white adipose tissue, modulating thermogenic function in these cells, and thereby contributing to regulation of whole-body energy homeostasis. The proposed studies will determine the molecular mechanisms by which BMPs influence adipose cell fate determination, adipocyte differentiation and mitochondrial activity in both in vitro and in vivo settings. The specific aims are to: (1) Define the role of BMP-7 in specifying brown adipose cell fate and modulating thermogenic function in committed brown and white preadipocytes, pluripotent mesenchymal cells, sorted primary adipose progenitors and human preadipocytes. (2) Dissect the molecular mechanisms by which different BMPs, particularly BMP-7, regulate brown vs. white adipogenesis and mitochondrial function. (3) Define the in vivo role of BMPs in regulation of adipocyte differentiation, mitochondrial function and whole-body energy balance by treatment of lean and obese mice with BMPs and characterization of their effects on adipose physiology and whole-body energy metabolism. The developmental role of BMP signaling in fat development will be further investigated by characterization of constitutive and inducible adipose-specific BMP receptor knockout mice. These studies will increase our understanding of adipocyte differentiation, energy balance, and BMP actions, and may help to develop potential therapeutic approaches for obesity and related diseases.